Citi Research has reaffirmed its ‘Buy (High Risk)’ rating on Vi, setting a target price of ₹12 per share. This suggests a potential upside of approximately 67% from its recent trading price of ₹7.32. The positive outlook is attributed to several factors:
- Government Equity Conversion: The Indian government converted ₹36,950 crore of Vi’s spectrum dues into equity, increasing its stake to 48.99%. Despite this significant holding, operational control remains with the company’s promoters.
- Credit Rating Upgrade: ICRA upgraded Vi’s long-term bank facilities rating to investment grade (BBB-), which is expected to facilitate its bank debt-raising efforts.
- Debt Reduction: Following the equity conversion, Vi’s annual dues to the government for FY26, FY27, and FY28 are now reduced to around ₹19,000 crore, ₹23,000 crore, and ₹32,000 crore respectively, down from approximately ₹30,000 crore, ₹43,000 crore, and ₹43,000 crore earlier.
📊 Financial Performance: Q4 FY25
Analysts project Vi’s Q4 FY25 revenue to rise by 3.5% year-on-year to ₹10,982 crore. However, the company is expected to report a net loss of approximately ₹7,626 crore.
- ARPU Growth: Average Revenue Per User (ARPU) improved to ₹173 in Q3 FY25, up from ₹166 in the previous quarter.
- Subscriber Base: Despite efforts to enhance 4G capacity, Vi’s subscriber base declined from 225.9 million in Q4 FY23 to 205 million in Q2 FY25.
📶 5G Expansion and Network Upgrades
Vi is actively expanding its 5G services:
- 5G Rollout: After launching 5G in Mumbai, Vi plans to extend services to Delhi, Chandigarh, Bengaluru, and Patna in April 2025.
- Capital Expenditure: The company has earmarked ₹50,000–55,000 crore over the next three years for capital expenditure, focusing on 5G rollout and 4G network expansion.
- Infrastructure Deals: Vi concluded a $3.6 billion deal with Nokia, Ericsson, and Samsung for network equipment, marking the initial phase of a $6.6 billion capital expenditure plan.
📶 5G Expansion and Network Upgrades
Vi is actively expanding its 5G services:
- 5G Rollout: After launching 5G in Mumbai, Vi plans to extend services to Delhi, Chandigarh, Bengaluru, and Patna in April 2025.
- Capital Expenditure: The company has earmarked ₹50,000–55,000 crore over the next three years for capital expenditure, focusing on 5G rollout and 4G network expansion.
- Infrastructure Deals: Vi concluded a $3.6 billion deal with Nokia, Ericsson, and Samsung for network equipment, marking the initial phase of a $6.6 billion capital expenditure plan.
💰 Fundraising Efforts
To support its expansion plans, Vi has undertaken significant fundraising initiatives:
- Follow-on Public Offering (FPO): In April 2024, Vi raised ₹180 billion through India’s largest-ever FPO, which was more than six times oversubscribed.
- Debt and Equity Plans: The company aims to raise a total of ₹450 billion through a combination of equity and debt to fund its 5G rollout and 4G expansion.
⚠️ Investment Considerations
While Vi’s recent developments indicate a strategic push towards growth and stability, investors should remain cautious:
- High Debt Levels: Despite fundraising efforts, Vi continues to grapple with substantial debt, which poses ongoing financial challenges.
- Competitive Market: The telecom sector in India is highly competitive, with major players like Reliance Jio and Bharti Airtel leading in 5G deployment and subscriber base.
- Operational Risks: The success of Vi’s turnaround strategy hinges on effective execution of its expansion plans and the ability to regain market share.
Disclaimer:
The content provided in this article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Readers are advised to do their own research or consult a financial advisor before making any investment decisions. The author and publisher are not responsible for any financial losses or damages resulting from actions taken based on the information provided here.
